Glossary
A
Act of GodAn event, which is not the fault of any individual. Acts of God may or may not be insurable.
ActuaryA professional qualified to apply principles to solving financial problems, normally in connection with pensions, life insurance and investment.
Additional Voluntary ContributionsAdditional contributions made by pension scheme members to top up their eventual retirement income.
AgentSomeone who acts for one or a number of companies, particularly in selling insurance.
All RisksWider cover than given under a normal property insurance policy. Covers any loss or damage apart from exclusions stated in the policy. This usually applies to items being insured outside of t...
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AverageA policy condition requiring the amount of a claim payment to be reduced proportionately if the policyholder has not insured their property for the full amount of its value or replacement cost....
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B
BettermentThe principle by which the insured makes a payment towards the cost of the claim because his or her property will be in better condition after repair than before the loss or damage occurred....
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BrokerA company registered with the Insurance Brokers Registration Council (IBRC) under the Insurance Brokers (Registration) Act 1977.
Buildings InsuranceThis is a policy covering the structure of a building against a number of different risks including fire flood damage etc.
Business InterruptionYou can find the interpretation of this under consequential loss.
C
CapacityEvery insurer has a limit on the amount on new business it can write. The FSA looks at a company to ensure it has adequate reserves.
CertificateThis is the document issued by insurers as evidence that insurance is in force.
Certificate of Insurance This is a document proving you have valid car insurance in the UK.
ClaimWhen a policyholder seeks payment or settlement for a loss they have suffered under the terms of a policy.
Co-InsuranceThis is an arrangement whereby a number of insurance companies share in the cover of one particular risk.
Commercial BusinessAn insurance policy taken out by a company, partnership or organisation to cover their business. Would include fleet policies for motor business. Often these policies are heavily we...
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CommissionMonies paid by an insurance company to a broker/ independent intermediary/agent for selling policies. In most companies a consumer has the right to find out what commission an agent is earni...
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Comprehensive Cover The most expensive cover available but covers your property as well as a third party. Usually comes with additional benefits such as windscreen cover.
Comprehensive InsuranceA policy which covers a number of types of loss or damage mainly in motor insurance.
ConditionThis is part of an insurance policy stating that certain rules must be followed, for example, the duty to take reasonable care to protect property.
Consequential LossThis is insurance covering the loss of profits of a business resulting from an insured event (also known as Business Interruption).
Contents PolicyThis is an insurance policy covering the contents of a home or building against a number of different risks.
ContributionThe principle of contribution applies where a risk is insured twice or more, for example on a travel and household policy, and the two insurers concerned may share the cost of any claim. T...
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Cover NoteThis is an insurance document giving temporary evidence of cover while the policy and certificate are being prepared. Normally, cover notes are issued at the start of a policy while the insu...
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Critical Illness InsuranceThese policies pays out a lump sum on the diagnosis of certain life-threatening illnesses specified in the policy.
D
Direct Sources of Insurance BusinessInsurance transacted where no intermediary is involved, including marketing sources (e.g. newspaper advertisements), telephone sales, the internet and business thro...
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E
EndorsementThis is a written amendment to an insurance policy that becomes a legal part of the insurance documentation.
Ex Gratia PaymentAny payment made by an insurance company that is not strictly necessary, under the terms of the policy. Often these payments are good will gestures to rectify poor service.
ExcessThis is an amount of money that the policyholder has to pay towards the cost of a claim. There is normally a combination of compulsory and voluntary excesses. More information is available on yo...
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Excess This is the amount you pay when you have to make a claim. Typically young drivers car insurance will have a higher excess than older drivers.
Excess of Loss PolicyThis is a special excess policy which covers claims costs exceeding an amount specified in the policy.
ExclusionThis is a specified property, person or event that the insurance policy does not cover. Market Exclusions are exclusions that the insurance market finds uninsurable.
G
General InsuranceThis refers to the insurance of risks where the policy offers cover for a limited period, usually one year.
General LiabilityThis cover protects the policyholder's legal liability for injury, property damage or financial loss caused to others.
Green CardThis is a document issued to policyholders motoring abroad as evidence that they have the minimum insurance cover required by the law of the country visited. Not essential for EU driving, be...
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I
IndemnityThe insurance principle by which policyholders are put in the same financial position after a loss as they were immediately before it.
Insurable InterestA principle of insurance which states that someone may only take out cover if they stands to suffer a financial loss from an event covered by the insurance policy.
InsuranceA financial service offering financial compensation for something that may or may not happen.
Insurance CompanyA company that takes on risk within the insurance policies it sells in return for the premiums.
Insurance Premium TaxA UK governement tax imposed on most non-life insurance premiums.
InsuredThe individual covered by an insurance policy.
IntermediaryThis is the person or organisation that offers advice and arranges policies for clients.
K
Knock-for-KnockAn agreement whereby each motor insurer agrees to pay for damage to its policyholder's car, regardless of blame, providing the policy covered damage to the policyholder's own car.
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L
Legal Expenses InsuranceOften referred to as uninsured loss recovery services for car insurance. Covers the cost of legal proceedings in circumstances defined in the policy.
LiabilityThis is the legal responsibility for causing loss to someone else by injuring him or her or damaging their property.
Lloyd's MembersIndividuals on whose behalf Lloyd's policies are issued. They pledge all their personal wealth to pay losses. Corporate members were also introduced in 1994.
Lloyd's of LondonAn insurance market organised into syndicates, which underwrites most types of policy.
LoadingThis describes the extent to which an individual is charged more than the "average" for their insurance. This is common in personal insurance.
Loss AdjusterA individual who is independent of an insurance company but engaged and paid by it, who checks that a claim is covered and negotiates with the policyholder the amount payable for a claim.
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Loss AssessorThis is an individual acting on behalf of policyholders in assessing claims.
M
Mechanical Breakdown InsuranceThis cover protects against the cost of breakdowns of household appliances or motor vehicles.
Motor InsuranceThis insurance covers legal liabilities arising from the use of a motor vehicle. Comprehensive policies also cover damage to the vehicle. The minimum legal cover in the UK is third part...
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MutualAn insurance company that is owned by its policy holders.
N
New-For-OldCover for property where an item lost or destroyed would be replaced with a brand new one, with no deduction for wear and tear. Also called "replacement as new".
No Claim Discount (or Bonus)A reduction in a renewal premium to reflect a claim-free record; used most often in motor insurance. Policyholders can typically build up to a 65% no claims bonus. Find mor...
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No Claims Bonus (NCB) This is usually measured in years. It is how many years you have held car insurance without having an accident or making a claim.
P
Personal Lines of BusinessThis refers to any insurance policy taken out by an individual in his/her private capacity, normally car home and travel insurance.
PolicyThe insurance document providing full details of the contract between the insurer and the policyholder.
PolicyholderThis is the person to which the insurer issues the policy. It normally also means the person to whom benefits are payable.
PremiumThe amount paid by the policyholder for insurance.
Proposal FormThis is an application for insurance cover.
ProposerThis is the person or company who applies to take out insurance.
Protected NCB If you have over 4 years NCB(see below) you can protect it which allows you to make a set number of claims without reducing your NCB.
R
RateThe price of insurance, usually expressed as the cost per unit of cover, e.g. £x per £100.
Renewal NoticeAn insurance notice sent to the policyholder inviting him/her to renew a policy for a further period and stating the premium payable.
S
SubrogationThe right of an insurer who has indemnified a policyholder to take over any legal rights the policyholder may have had in respect of that particular claim.
Sum InsuredThe amount for which property is insured, and the maximum amount which the insurance company will pay for any claim.
SyndicateThis refers to a group of underwriters at Lloyd's.
T
Third PartyA party involved in a claim who is neither the policyholder nor the insurer.
Third Party Cover Quote This level of insurance only covers other peoples property, none of your property is covered under your car insurance. Visit here to get a free auto ...
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Third Party Fire & Theft This covers you against fire, theft and damage to third parties properties. Click here to get your car insurance quote today.
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Trading ResultAn insurer's overall profit/loss calculated as the underwriting result plus investment income.
U
UnderinsuranceWhen the sum insured is not enough to cover the maximum possible loss or damage. Under the condition of average an insurance firm may under pay a claim by the same percentage that the in...
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UnderwriterThis is the person who decides whether to accept a risk and calculates a premium to be charged to the insured.
Utmost Good FaithThis refers to the principle of insurance that requires a proposer to give all relevant information to the insurer.
W
Write-OffA damaged car or vehicle which is not repairable, or one that would cost more to repair than the car was worth before the damage occurred. Also known as a "total loss". Often an ins...
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